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US Tariffs: Ifo Institute Warns of Recession in Germany
🇩🇪 Germany /Economy & Trade

US Tariffs: Ifo Institute Warns of Recession in Germany

From Die Zeit · (56m ago) German Critical tone

Translated from German, summarized and contextualized by DistantNews.

TLDR

  • The ifo Institute warns that escalating US tariffs on EU cars could trigger a recession in Germany.
  • Germany, a major auto exporter, would be severely impacted if the EU retaliates with its own tariffs on US products.
  • The institute suggests that the US tariff hike, potentially increasing from 15% to 25%, could be interpreted as the beginning of an economic war against Germany.

The Munich-based ifo Institute has issued a stark warning regarding the potential economic fallout for Germany should the United States proceed with its planned tariff increases on European automobiles. The institute's president, Clemens Fuest, articulated that a full-blown trade war could plunge Germany into a recession as early as 2026.

If this turns into a new trade war, Germany risks a recession in 2026.

— Clemens Fuest, ifo PresidentThe ifo Institute president's warning about the severe economic consequences for Germany if trade tensions escalate.

This situation is particularly sensitive for Germany, given its significant role as an auto exporter within the EU. The proposed tariff hike, which would raise the rate on EU car imports to the US from 15% to 25%, is seen by some German economists as a direct economic assault. The timing is also critical, as the German auto industry is already navigating a challenging period, making it more vulnerable to external pressures.

The planned increase to 25 percent can be interpreted as the beginning of an economic war against Germany.

— Ferdinand Dudenhöffer, Automotive EconomistAn expert's interpretation of the US tariff hike as a hostile economic act targeting Germany.

From a German perspective, as highlighted by Die Zeit, this trade dispute is not merely an economic issue but also a geopolitical one. The commentary suggests that such aggressive trade measures could be interpreted as a deliberate strategy to weaken Germany's economic standing. While some advise caution and waiting for the EU's official response, others advocate for 'appropriate countermeasures,' indicating a divided but concerned response within the German economic and political spheres.

The EU should first wait to see if the increased tariffs will actually be levied.

— Jens Südekum, Economic AdvisorThe economic advisor's recommendation for the EU to exercise restraint before reacting to the US tariff announcement.
DistantNews Editorial

Originally published by Die Zeit in German. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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